Tax cut fever gets little rise out of voters

It seems everyone running for office has a plan for the budget surplus, but what are the chances anything will get done?

WASHINGTON -- It's as if the Publisher's Clearing House van pulled up to the Capitol and gave the jackpot to Congress.

The jackpot is the budget surplus, now expected to hit $1.9-trillion over the next 10 years. Republicans are moving quickly to spend it.

They are rushing forward with a plan to end the "marriage penalty" that taxes married couples at a higher rate and have cleverly packaged it as a Valentine's Day gift. They're also likely to take up tax cuts for health care and education.

But could this be another example of Congress being out of step with the nation? Despite all the talk on Capitol Hill, polls show little demand for tax cuts.

Sen. John McCain's surprisingly strong victory in the New Hampshire primary last week provided fresh evidence that sweeping tax cuts are not a hot issue, even for Republican voters. While Texas Gov. George W. Bush had proposed a broad program of cuts, McCain backed a smaller plan and emphasized the need to shore up Social Security and pay down the national debt first.

Karlyn Bowman, a scholar at the American Enterprise Institute who tracks public opinion, said tax cuts don't have much political currency because most voters are skeptical they will ever see one.

"Given that level of public skepticism, a big tax cut isn't necessarily an issue that is going to excite the national electorate," she said.

So what are the prospects for a tax cut this year?

With the big surplus and all the tax talk on the campaign trail, the Republican-controlled Congress may have more success than last year, when a $792-billion cut was vetoed by President Clinton. This time, Clinton has said he will support a limited tax bill, including one that addresses the marriage penalty.

But despite the president's support, many Democrats don't think a tax cut is best.

"We first have to deal with Social Security and Medicare before we do other things with the surplus," said Sen. Bob Graham, D-Fla.

Tax cut fever

Bush has proposed a sweeping plan that would slash tax rates for everyone. The current system has five rates -- 15, 28, 31, 36 and 40 percent -- that get progressively higher for people with larger incomes. Bush would replace that with a four-rate system of 10, 15, 25 and 33 percent

Bush also wants to double the child tax credit to $1,000, boost education credits and allow people who don't itemize their taxes to get credit for charitable contributions. He would also reduce the marriage penalty and repeal the Social Security earnings test, which forces recipients to lose a portion of their benefits if they continue to work. Overall, his plan would provide $483-billion in cuts over five years.

McCain offers a more modest plan because he earmarks more than three-fourths of the surplus for Medicare, Social Security and reducing the national debt.

The McCain plan calls for expanding the number of taxpayers who qualify for the 15 percent bracket, increasing the standard deduction to help erase the marriage penalty, doubling the child tax credit and eliminating the Social Security earnings test.

By contrast, Democrats have a milder case of tax cut fever.

In his State of the Union address, President Clinton asked Congress to approve a $250-billion tax cut over 10 years, which would reduce the marriage penalty and set up retirement savings accounts for low-income families, with the government offering a 2-for-1 match for the first $100 contributed by each person.

Vice President Al Gore backed the Clinton plan and proposed new education accounts modeled after 401(k) retirement plans. But the Clinton-Gore plan to reduce the marriage penalty is not as sweeping as the GOP plan.

Former Sen. Bill Bradley offers fewer specifics about his plan, saying he will "fight for the lowest rates for the greatest number of Americans" and use tax breaks to increase health insurance coverage for more people.

Critics have said Bush's plan is too broad and spends too much of the surplus.

"Being conservative means getting out of debt," Graham said at a McCain rally last week.

Bush has responded to criticism by comparing McCain to Bill Clinton and Al Gore.

"It's important our party nominate someone who has a tax cut plan different than Clinton-Gore's, not somebody who sounds exactly like them," Bush said last week.

But even Bush recognizes that he has to reshape the tax debate. In television commercials and in appearances, he has started to emphasize that his tax plan also would protect Social Security and Medicare.

The Valentine's gift

The GOP leaders in Congress recognize their tax cut proposal last year didn't spark much interest among voters. It was so broad that no group of voters was particularly hungry for it

"I think it is a good approach," said Sen. Connie Mack, R-Fla. "Individual bills have a better chance."

The first will be the marriage penalty, which will be considered by the House of Representatives this week. GOP leaders plan to have the vote close to Valentine's Day so they can hype it as a gift to married couples.

Republicans think the marriage penalty plan is an issue the Democrats can't afford to oppose.

"It will cause trouble to the Democrats in the House and Senate and the president, if he vetoes this bill," said Rep. Jennifer Dunn, R-Wash.

Clinton and some Democrats are backing a more limited marriage penalty plan. They say the GOP plan is irresponsible because it would spend one-fourth of the surplus and disproportionately help the richest Americans.

It's not clear if the two sides will strike a deal. Even if the marriage penalty plan is approved by the House, it will face a difficult time in the Senate, where Democrats have more ability to block GOP proposals. The same may be true for other tax bills on education and health care.